Exiled Spam King's Go-Go Life

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Exiled Spam King's Go-Go Life

Walt Rines, friend and former spamming partner of Sanford Wallace, outside a restaurant in Stratham, New Hampshire. View Slideshow ROCHESTER, New Hampshire – As the head of Philadelphia-based junk e-mail firm Cyber Promotions, Sanford Wallace was cyberspace's most hated person in the 1990s.

Several years – and numerous multimillion-dollar lawsuits – later, "Spamford" has a new nickname, a new profession and a new perspective on the spam business.

Today, young nightclub-goers in this woodsy section of southern New Hampshire know Wallace simply as "DJ MasterWeb" – the head disk jockey and owner of Plum Crazy, a popular night spot that features hip-hop and reggae tunes, along with a cadre of young female dancers in metal cages.

"Now, instead of making money near a bunch of computers, I make money near a bunch of beautiful women," Wallace said last week as he showed off the club.

At a time when the Internet is groaning under an ever-increasing load of spam – which laws, vigilante efforts and technology seem unable to eradicate – Wallace's transformation from spam king to nightclub owner provides one of the few bright spots for opponents of junk e-mail.

"I think the world of Sanford," said Pete Wellborn, an Atlanta attorney who won a $2 million judgment against Wallace on behalf of EarthLink in 1998. "He really is a man of his word, unlike the spammers we see now who are either ignorant or common criminals."

Wallace bought Plum Crazy in early 2002 from friend and former spamming partner Walt Rines. The club draws customers from all over northern New England. It occupies space formerly used by a Chinese restaurant on a highway just outside Rochester, population 28,461.

Few patrons of Plum Crazy, however, know about Wallace's history as one of the Internet's most notorious spammers.

"I try to keep it separate," said Wallace, now in his mid-thirties. "A lot of people misunderstand my past."

That past included a rapid ascent to the top of the spamming world in 1996. Wallace once boasted of sending 25 million junk e-mails per day on behalf of clients ranging from porn sites to spam-software vendors. By some estimates Cyber Promotions was responsible for 80 percent of the spam on the Net.

Wallace quickly became the target of over a dozen lawsuits from Internet service providers, including America Online, CompuServe, Bigfoot and Concentric Network.

According to Wellborn, Wallace is a savvy businessman who believed spamming was a First Amendment right. Once the lawsuits against him clearly defined the illegality of spamming, Wallace "changed his business model," said Wellborn.

In 1998 Wallace and Rines attempted to launch a new company that would provide users with low-cost Internet service in exchange for agreeing to receive spam. But Wallace and Rines' Spambone idea died when their company, GTMI, couldn't find a big networking firm willing to provide bandwidth. With a flourish, Wallace announced his retirement from spamming in 1998.

Wallace said he settled all of the judgments against him "amicably" and didn't have to pay EarthLink or any of the other litigants a penny. He is also quick to assert that the lawsuits didn't put him out of business.

"They put me into business – a business that worked," said Wallace.

Indeed, Wallace discovered there was plenty of money to be made in opt-in or permission-based e-mail. In late 1998 he formed SmartBot, an auto-responder e-mail service that enables companies automatically to generate customized e-mails in response to queries from sales prospects.

SmartBot's business quickly mushroomed. "Let's just say I paid millions of dollars in taxes," said Wallace. But the dot-com crash hit SmartBot's customers hard, and Wallace's business just as quickly started to dry up.

In late 2001, Rines, a New Hampshire native, invited Wallace to visit Plum Crazy, which Rines had recently purchased. Wallace was working as a radio DJ in New York at the time, and was interested in doing "live" shows.

"He fell in love with the club. It was just small enough so he could feel like he could master it," said Rines.

Wallace, who had just separated from his wife, moved to New Hampshire and bought the club from Rines in January 2002. In less than two years, Plum Crazy has developed a large and devoted following, with 75 percent of its customers being women.

The club has had its share of problems, however. Earlier this year, Wallace nearly lost the property in a dispute with his landlord over insurance rates. Plum Crazy also made headlines in local papers recently – once when a customer slashed another's throat with a broken bottle, and again after a brawl in the club's parking lot. On a separate occasion, 20 police officers showed up at the club and performed what Wallace termed a warrantless raid.

Wallace now shrugs off the problems. "When you're in the nightclub business, there's always going to be sharks around. But I'm certainly no stranger to having people circle around me looking to pick a fight," he said.

This past summer, Wallace opened Club Vibe, a new nightclub catering to teens, in nearby Somersworth. But Rines said he thinks his friend, originally from New Jersey, may soon tire of the travails of being a nightclub owner.

"I don't really see this holding his attention for too long. I think the novelty is going to wear off," said Rines. He lives about 20 miles away in Stratham and said he talks to Sanford a couple of times a week, although he seldom goes to the club.

Rines said he thinks Wallace's next move may be to Las Vegas, where the two spent what he termed a "very successful" summer in 2001 trying to beat the casinos.

"Sanford has always been good at trying to get an advantage," Rines said.

Like Wallace, Rines officially checked out of the spamming business in 1998. But while he's no longer sending junk e-mail, Rines admits he's pushing the envelope with what he termed "aggressive" Internet marketing techniques.

One of Rines' latest ventures is Adcaster Extreme, a software program that broadcasts pop-up ads to Windows computers running the Messenger service. He claims the technology isn't like e-mail spamming, because PC users can turn off a feature in Windows to block the pop-ups.

According to domain records, Rines' company, Odysseus Marketing, also apparently marketed Message Broadcaster, a program designed to inject ads into Web-based message boards.

Rines acknowledged that he has also hired programmers to develop an "adware" program known as ClientMan. The software is designed to be bundled with free programs such as Kazaa and to generate ad revenue streams. Symantec and others have categorized ClientMan as spyware and say it secretly uploads programs to and downloads information from the user's system.

Rines has also created a website called Kazanon.com where he distributes a program that, according to the site, enables users to run file-sharing programs without being detected. Rines said he has distributed around 100,000 copies of Kazanon in about two weeks.

But an analysis of the Kazanon software by Lurhq, a security services firm, revealed that the program doesn't make users invisible online at all. Instead, the code simply appears to install a component of ClientMan that allows the program to stealthily download other programs onto the user's PC, said Lurhq senior researcher Joe Stewart.

Rines said Kazanon is "an experiment" and that he is mainly trying to determine "what people will agree to download."

Rines notes that a link at the bottom of the Kazanon site takes visitors to a terms-and-conditions page that explains everything about the program, including its spyware features. "(ClientMan) doesn't grab passwords or bank details or anything like that. I don't need that kind of liability," he said.

According to Rines, he would never engage in business practices that are illegal. However, he said he would certainly be willing to "do lots of things where the rules haven't been decided. If there's a gray area, I'm all for taking the opportunity, from a marketing standpoint."

But one expert in software law said Odysseus Marketing is likely breaking the law and engaging in deceptive trade practices through the Kazanon site.

"A buried-in-fine-print disclaimer doesn't protect the manufacturer" from violating state and federal business practices laws, said Cem Kaner, a lawyer and professor of computer science at Florida Institute of Technology.

Wallace said he's familiar with but not involved in any way with Kazanon or Rines' other businesses. According to Wallace, the terms of his spamming settlements don't prohibit him from engaging in such marketing practices. But Wallace said he's happy doing business primarily in the offline world.

"I don't want to sound like a politician, but I run a business that is successful and I love the work, and I'm going to be here a long time," he said.

Both Wallace and Rines say they hope Congress will pass a federal law prohibiting junk e-mail. But Wallace said it's more likely that technological solutions, such as challenge-response systems, will provide near-term relief from the deluge of spam.

Looking back on his battles with anti-spammers, Wallace said the "trench warfare" was "brutal" but ultimately led him to a personal reformation.

"They won, and I'm the first to admit it," said Wallace. "But (spam) has turned into a bigger problem, despite their efforts. So the battle isn't over yet.

"But they don't have to battle me," he said. "So they have a much easier battle."